The declining welfare rolls

Stateline has done some very good reporting on the decline of the welfare rolls. Welfare funding was switched to block grants in 1996, and the funding level has remained the same since then. From Stateline:

Welfare is not a big budget item for most states, taking up less than 2 percent of all state spending, according to the National Association of State Budget Officers (NASBO)…

…When Congress overhauled that system in 1996, it changed welfare from an “entitlement program” guaranteeing coverage to everyone who was eligible and instead created the Temporary Assistance for Needy Families (TANF) block grant that hands out lump-sum payments for welfare. States are essentially given a set amount of money and allowed to use it as they wish. The amount has stayed level since 1996.

The TANF system is believed by many to have saved governments a considerable amount of money. Nationwide, the average monthly number of welfare recipients fell from 12.8 million prior to the enactment of TANF to 4.4 million by September 2010, a decrease of more than two-thirds, according to NASBO.

A recent editorial by Peter Ferrara of the Carleson Center for Public Policy and Phil Kerpen of Americans for Prosperity claimed that in real dollars, total federal and state spending on welfare dropped 31 percent from 1995 to 2006. They called block-granting welfare “wildly successful” and argued that applying block grants to Medicaid “portends huge potential gains for taxpayers and the poor.”

Thankfully no governmental body is on the hook for either of these bankruptcies. It’s also interesting that both were filed as Chapter 11, which is for corporations, rather than Chapter 9, which is used for municipal bankruptcies.

Other states, though, have begun to lean ever more heavily on gambling — especially in tough times. At least 10 states enacted measures to expand gambling in the wake of the Great Recession, according to the Rockefeller Institute. Gambling revenues have grown about 4% on average over the past decade or so — from $15 billion in 1998 to $24 billion in 2008 — as states have expanded all forms of gambling in lieu of raising more traditional taxes.

Over the 1998 to 2008 period, gambling has accounted for between 2.1% and 2.5% of states’ overall tax revenues. Not surprisingly, it accounts for the largest share of the budget — 12.5% — in Nevada.